Office market set to expand in Jersey says real estate advisor

Thursday 08 February 2018

Development activity in Jersey offers an opportunity for the office market to expand, according to new research from real estate advisor Savills.

The firm says that the pool of investors in the market remains smaller than that for the UK, resulting in prime office yields remaining approximately 100 basis points above those in other UK cities at 6.5% in Guernsey and 6.25% in Jersey.

Prospects for the occupational markets look positive, say Savills: low supply in Guernsey, with little development activity in the pipeline, will maintain headline office rents at £42 per sqft for the best quality stock. In Jersey, rents are currently £35 per sq ft, having grown 9% since 2012. Vacancy rates in both Islands are estimated at 10%, but 5% among prime stock in Jersey and just 2% among prime stock in Guernsey.

Jersey, however, will see the completion of the second phase of the International Finance Centre (IFC) in St. Helier this summer, which will ultimately deliver 470,000 sq ft of new space upon completion, adding 16% to the island’s existing office stock. Much of the space is believed to be pre-let to tenants relocating from older, inefficient spaces, say Savills, so the market’s supply/demand balance will be maintained, with the development potentially bringing investable stock to the market as St Helier’s offices are expanded and brought up to international standards.

Tony Rowbotham, Director of Savills Guernsey, comments: “Office-based employment remains steady across both Jersey and Guernsey with leasing activity largely being driven by occupiers relocating from inefficient or substandard space to higher quality offices with larger floorplates. The investment market is consistently solid, offering opportunities for those able to look beyond traditional destinations on the UK mainland, with Jersey in particular being at an interesting stage with the IFC set to drive activity in the coming years and trigger an uplift in quality across the board.”